Elon Musk is due to appear in court on Nov. 14 to defend whether he deserves Tesla’s massive $56 billion compensation, refuting shareholders’ claims that he doesn’t need a full-time job to do it. Allegations of Unjust Earnings.
Tesla shareholder Richard Tornetta is seeking to rescind the company’s 2018 pay deal with Elon Musk, saying the board set “easy-to-achieve” performance targets for Elon Musk. The compensation plan was finalized to fund his dream of colonizing Mars. Tesla countered that the compensation package delivered a 10-fold increase in shareholder value.
The case is scheduled to go to trial on Nov. 14 and will be ruled by Delaware Chancellor Justice Kathaleen McCormick. Previously, she was also the presiding judge in Twitter’s lawsuit against Elon Musk for breach of acquisition, but the lawsuit ended in October. At the time, Elon Musk agreed before a deadline to buy Twitter for $44 billion, funded largely from his Tesla stock holdings.
“If Elon Musk doesn’t get paid by Tesla, I think we’re going to see a lot of unpredictable things like how Tesla operates and pays for acquisitions,” said Ann Lipton, a professor at Tulane University School of Law. Twitter’s fees will be affected.” However, Lipton and other legal experts say the lawsuit brought by Tonita will be much more difficult than Twitter’s lawsuit against Elon Musk.
In addition to managing Tesla, Elon Musk also founded and served as CEO of SpaceX, one of the world’s most valuable private companies, and founded brain-computer interface company Neuralink, tunnel-digging company The Boring Co, and artificial intelligence (AI) research. Lab OpenAI. Last week, he named himself Twitter CEO.
CEO of several companies
Tonita’s lawyers argued that the 2018 compensation package failed to achieve its stated goal of keeping Elon Musk focused on Tesla. They describe Elon Musk as a “part-time CEO” who split his time in two back in 2018. Work at Tesla on Tuesdays, Wednesdays and Fridays, and SpaceX on Mondays and Thursdays.
According to the lawsuit, Tesla chairman Robyn Denholm emailed then-Tesla chief people officer Gabrielle Toledano in 2018, saying that Ma Sk’s “time at Tesla is getting shorter and this is getting more problematic.”
However, Tesla believes that the compensation package does not require Elon Musk to go to the company every day, or stay at the company for a specific time, but requires him to achieve “bold goals”, both to enrich Elon Musk himself and to help people like Tonita. Shareholders get rich.
The controversial compensation package allows Elon Musk to buy 1% of Tesla stock at a steep discount each time he achieves performance and financial goals. Otherwise, Elon Musk gets nothing. Driven by increased Model 3 production, Tesla’s market value has soared from $50 billion to $650 billion, hitting 11 of 12 predetermined targets, court filings show.
Amit Batish, an analyst at executive compensation research firm Equilar, said Elon Musk’s compensation package, which was initially valued at about $50 billion, has made him a $200 billion fortune so far. The stock award package is more than six times the pay of the 200 highest-paid CEOs combined last year.
The 14th trial is likely to focus on allegations by Tonita that the package was developed and approved by directors who benefited from Elon Musk and was marketed to other shareholders without transparency.
Firmly control the board
In the lawsuit filing, Tonita cited numerous examples of Elon Musk’s tight control of the board. For example, Antonio Gracias, described by the plaintiffs as a close friend of Elon Musk and serving as lead independent director from 2010 to 2019, testified in 2021 that Elon Musk could sell Tesla if he wanted to, And the board couldn’t stop him.
Minor Myers, a professor at the University of Connecticut Law School, said: “Who is working for whom? Is Elon Musk working for the board, or is the board escorting Musk?” With Skek’s compensation package cancelled, Tesla’s board could simply create a new package and do so guided by Judge McCormick’s ruling.
Things have changed, though, complicating the process even more. Miles said: “How will the parties view this now that Elon Musk has Twitter? It will be a huge challenge to determine how to keep Elon Musk from being distracted by other projects?” Miles also proposed One question: How much does the Tesla board need to spend to get Elon Musk’s full attention?